CCCS’s Debt Management Program

By Deborah Nayrocker

 Dear Deborah: My husband and I are in a financial crisis. He is in the contractor business and was severely impacted by the economic downturn. While we are trying to get caught up on our first and second mortgages, our credit card bills are suffering, and the collectors are calling. We have met with Consumer Credit Counseling Services regarding participating in their Debt Management Plan. This would significantly reduce our monthly payments and provide discipline for us. Unfortunately, I don’t know enough about this program. Is it a good idea? — F & L in Florida

Answer:  First and foremost, consumers should work directly with their creditors. After all, the creditors loaned you the money in good faith, expecting you to pay it all back. Call your creditors and explain your circumstances. Can you negotiate lower interest rates or smaller payments? Ignoring the bills or phone calls will not improve your financial situation. It will only make matters worse.

If you do need to seek out credit counseling, the counseling agency you consulted with, Consumer Credit Counseling Services (CCCS), is a reputable agency. It is accredited through National Foundation for Credit Counseling (NFCC), the nation’s oldest nonprofit network of agencies at about 850 U.S. locations. Their credit counselors must meet high quality standards and pass counselor certification exams. The network offers help in person, by mail, online, or through their toll-free hotline (1-800-388-2227).

Consumer Credit Counseling Services offers free and confidential budget counseling with NFCC certified counselors. The counselors work with you to analyze your income, monthly expenses, and debts. Be aware that the CCCS Budget Counseling services offered are NOT the same as their Debt Management Program.

The Debt Management Program (DMP) has an initial no-cost credit counseling session to review the current financial situation and look at options. If you decide to enroll in the DMP, your counselor will 1) contact the creditors and negotiate a workable repayment plan and 2) work with creditors to waive over-limit fees and late fees. You, the client, pay a monthly payment through CCCS, often withdrawn from your bank account. The credit counseling agency sends those funds directly to your creditors.

How will a DMP affect your credit? According to the NFCC: “Your participation in a DMP may change information that is already on your credit report. If your credit report reflects that you have paid creditors as agreed in the past, a DMP could have a negative impact on a creditworthiness decision by a potential creditor, landlord, or employer because it is an indicator that you are or have experienced financial difficulties.”

Debt Management Program credit counselors set up ongoing sessions to help you be in charge of your financial situation. The DMP is successfully completed when the debts have been paid off.

Self-control is the key to financial freedom. Patience and determination also help you reach your goals and get out of debt. Don’t give up!


Deborah Nayrocker is an author and columnist. She is the award-winning author of The Art of Debt-Free Living and Living a Balanced Financial Life.

Copyright by Deborah J. Nayrocker. All rights reserved.


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